J2 Buys Competition (and other M&A)

Peter : On Rad's Radar?
| Peter Radizeski of RAD-INFO, Inc. talking telecom, Cloud, VoIP, CLEC, and The Channel.

J2 Buys Competition (and other M&A)

mergers.jpgSo Salesforce bought a Ruby based cloud platform company called Heroku for $212M, which my RubyonRails geeks say is a steal. Why? Marc Benioff, chairman and CEO, salesforce.com, says: "Ruby is the language of Cloud 2, and Heroku is the leading Ruby application platform-as-a-service for Cloud 2 that is fueling this growing community. We think this acquisition will uniquely position salesforce.com as the cornerstone for the next generation of app developers."

AT&T buys Xanboo, a home automation company, to provide what we have all waited for: the smart home. This goes into Ma Bell's plan for home video monitoring via wireline or wireless, although I don't see how this will work since the iPhone already clogs the former Cingular network. Video monitoring of homes via smartphones will NOT help that congestion. I know you don't want to be a dumb pipe, but you can't be a clogged pipe provider either!

Why all the M&A activity? Well, according to Google: There's not enough time to build, so you have to buy. You buy th eexpertise, the patents, the know-how, and if you are really lucky, maybe some revenue.

Finally, J2 acquired Protus IP Solutions, Inc. Protus is the Canadian version of J2. While J2 owns eFax, Onebox, eVoice and Electric Mail brands, Protus owns MyFax, My1Voice and Campaigner (email marketing), which generates about $72M in revenue. J2 paid $213M in cash for approximately 500k subscribers. (J2 had 1.4M DID's and combined its 1.9M).

J2 has 11M free DID's in service that generate $0.03 per month. The 1.4 million in paid DID's generate $14.21 in revenue per month. They paid 3x sales or $426 per paid subscriber for Protus. That's a LONG pay out, but it makes my pal, Eric Nashbar, CEO at FaxBetter very happy.

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